Report Prepared for ABC Energy
Connections that Drive Performance In Energy Companies
June 07, 2019
Communication and collaboration among those at the top of the organization is critical for strategy formulation and implementation, and ultimately, the organization’s success.
This report offers insights regarding ABC Energy’s current patterns of collaboration, strategic alignment and organizational performance.
NOTE: This sample report presents a simplified network and the number of teams and which teams are included will be tailored to the needs of each organization.
1. Performance and Adaptability
Relative Importance of Key Performance Indicators
ELT members rated the relative importance of each success indicator by allocating a portion of 100 total points. The chart shows the percent breakdown of relative importance.
Performance on Key Indicators versus Expectations
ELT members rated the performance of the organization on each indicator in reference to expectations. The scatter plot displays performance as well as relative importance information.
ABC Energy is performing well on the top indicator (Volume Growth), but is not meeting expectations for other important indicators (Net Cash Flow, Human Capital Development).
- Upper right: Performing well in areas of greater importance
- Upper left: Performing well in areas of lesser importance
- Lower right: Performing below a satisfactory level in areas of greater importance
- Lower left: Performing below a satisfactory level in areas of lesser importance
Ability to Respond to Key Opportunities and Threats
Agility is a measure of how fast and how well organizations can adapt to opportunities and threats in the business environment. Given the high level of uncertainty and the rapid pace of change in the energy industry, agility represents a critical organizational capability. All survey participants were asked how easily and quickly the organization can act with agility for 8 different dimensions listed below.
The percentage of people who “Strongly Agree” or “Agree” with each statement is presented to the right of each bar in the graph.
ABC Energy excels in responding to longer-term changes in global market cycles and short-term market shifts, but struggles to expand into new geographies or markets, to change the scope of its business portfolio, or to adopt new technologies.
2. Strategic Readiness
An organization’s performance and agility in response to changing business environments depends on its strategic readiness.
The readiness of organizations to implement their strategy is contingent on the following key strategic conditions:
Clarity
A clear strategic vision provides the organization with direction into an uncertain future. If clarity is low, leaders may become overwhelmed or distracted by tasks that are irrelevant or even counterproductive to meeting strategic goals.
Appropriateness
Leaders who agree with the goals and objectives of the organization’s strategy have a greater sense of ownership and are more motivated to implement the strategy. If leaders resist, this resistance should be investigated to inform strategic thinking and planning.
Commitment
Challenges commonly arise with any large scale strategic initiative. The effort leaders invest in implementing the strategy is a strong predictor of implementation success. Leaders who are not committed to their role in the strategy may not persist, and if they falter, those who report to them are likely to as well.
Overall Strategic Readiness
This graph displays overall views in the organization regarding strategic clarity, appropriateness, and commitment. Scores above 3 indicate that respondents generally agree that the strategy is clear, in the best interest of the organization, and that they are committed to their role in executing the strategy.
This graph provides a closer look at the variability in responses regarding strategic clarity, appropriateness, and commitment. This information provides a more nuanced view of the strength of opinions held and the level of agreement among members of the organization.
There is stronger, more consistent agreement regarding commitment to executing the strategy, than the clarity or appropriateness of the strategy for ABC Energy.
Group-Level Breakdown of Strategic Readiness
The information in this stacked bar chart provides a sense of each group’s current level of strategic readiness.
Each section of the bar depicts the group’s average score for clarity, appropriateness, and commitment. Together these three elements make up the level of strategic readiness within each group.
As before, scores above 3 for each section of the bar indicate that respondents generally agree that the strategy is clear, in the best interest of the organization, and that they are committed to their role in executing the strategy.
The information in this chart may be used to identify where groups stand in their current readiness and which factors need more attention to improve their readiness to implement the organization’s strategy.
The following team name abbreviations were used within this report:
| ABC Energy Executive Leadership | ELT |
| Accounting | Acct. |
| Drilling & Completion | D&C |
| Health Safety and Environment | HSE |
| Investor Relations and Government Affairs | IR&GA |
| Human Resources | HR |
| IT | IT |
| Production and Facilities Operations | P&FO |
| Marketing | Market. |
| Planning and Business Development | P&BD |
Several groups within ABC Energy have low levels of strategic readiness (P&BD, D&C, HSE, IR&GA, IT). ABC Energy can take targeted action to help address questions regarding the strategy with these groups to improve clarity and appropriateness ratings.
3. Critical Connections
An organization’s ability to implement its strategy, achieve its performance objectives, and maintain agility in response to changing business environments is, in large part, determined by how its leaders and teams work together. We refer to these as the critical connections driving your organization’s success.
Network Vulnerabilities
Robust communication networks regarding strategy formulation and implementation are critical among members of the upper levels of your organization.
Strategy formulation conversations address the competitive environment, the organization’s current strengths and weaknesses, and how the organization can leverage its resources and capabilities to create competitive advantage.
Strategy implementation conversations address how your organization can motivate employees to execute strategy, allocate resources, and coordinate work to achieve strategic objectives.
When these networks are overly dependent on a small number of people, they are at greater risk for potential disruption (e.g., if key individuals in the organization leave there will be a substantial drop in connectivity as well as potential bottlenecks that might be gatekeepers slowing the work of too many others). This chart shows the incremental drop in network connectivity when the most central members are removed.
Red line - A proportionate drop in network connectivity based on the number of people removed from the network (baseline).
Green line - Actual loss in strategy formulation connections (e.g., when the top 10% connected people are removed, the number of relationships drops by a disproportionate 34.1%).
Blue line - Actual loss in strategy implementation connections (e.g., when the top 10% connected people are removed, the number of relationships drops by a disproportionate 19.6%).
Level of Each Group’s Engagement in Strategy Formulation
These charts reflect the relative participation of different groups in strategy formulation conversations (i.e., how much each group is engaged by others outside their group (left chart) and engage others outside their group (right chart) in these conversations.
The ELT and D&C are actively engaged by others in strategy formulation conversations. D&C and HR also actively engage others in strategy formulation conversations.
Level of Each Group’s Engagement in Strategy Implementation
These charts reflect the relative participation of different groups in strategy implementation conversations (i.e., how much each group is engaged by others outside their group (left chart) and engage others outside their group (right chart) in these conversations.
D&C and HR are actively engaged by and actively engage others in strategy implementation conversations.
Composition of the Executive Leadership Team’s Strategic Network
The information below provides insights into the types of people who are engaged in strategic conversations with members of the Executive Leadership Team. The bar on the left describes conversations that include a ELT member. The bar on the right describes all other conversations (i.e., those not involving an ELT member). This information can be used as a comparative baseline representing conversations that are happening throughout the organization. We provide comparisons based on gender, organizational area, and tenure breakdown.
The potential for bias exists when certain groups of people are disproportionately relied on by the ELT. In other words, when the percentages in the right bar differ dramatically from the percentages in the left bar.
Gender
The ELT tends to have a higher proportion of men in their strategic networks (75% for strategy formulation and 61% for strategy implementation) than other members of the organization (39% for strategy formulation and 50% for strategy implementation). This difference is something to consider as it suggests that men in this organization may have more opportunity to influence strategy through their conversations with ELT members.
Team
A comparison of the columns in each table below suggests that the members of some groups are disproportionately engaged in conversations regarding strategy formulation and implementation with ELT members. For example, Drilling and Completion and Health Safety and Environment are much more likely to be engaged by ELT members in conversations regarding strategy formulation (compared to others in the organization engaging members of these groups). The same applies for Drilling and Completion and Health Safety and Environment when it comes to strategy implementation.
Strategy Formulation Network
| Team | ELT Conversations | Other Conversations | |
|---|---|---|---|
| 1 | Drilling & Completion | 22.7% | 4.3% |
| 2 | Health Safety and Environment | 18.2% | 4.3% |
| 3 | Planning and Business Development | 13.6% | 0.0% |
| 4 | Accounting | 9.1% | 13.0% |
| 5 | Investor Relations and Government Affairs | 9.1% | 13.0% |
| 6 | IT | 9.1% | 13.0% |
| 7 | Marketing | 9.1% | 4.3% |
| 8 | Human Resources | 4.5% | 17.4% |
| 9 | Production and Facilities Operations | 4.5% | 8.7% |
| 10 | ABC Energy Executive Leadership | 0.0% | 17.4% |
Strategy Implementation Network
| Team | ELT Conversations | Other Conversations | |
|---|---|---|---|
| 1 | Drilling & Completion | 24% | 0% |
| 2 | Health Safety and Environment | 16% | 5% |
| 3 | Human Resources | 12% | 10% |
| 4 | Investor Relations and Government Affairs | 12% | 10% |
| 5 | Marketing | 12% | 0% |
| 6 | IT | 8% | 15% |
| 7 | Planning and Business Development | 8% | 5% |
| 8 | Accounting | 4% | 20% |
| 9 | Production and Facilities Operations | 4% | 10% |
| 10 | ABC Energy Executive Leadership | 0% | 20% |
Tenure
A comparison of the columns in each table below suggests that tenure is impacting the extent to which employees are engaged in conversations regarding strategy formulation and implementation with ELT members. For example, ELT members in ABC Energy are more likely to engage people who have been with the organization for less than 5 years. These findings suggest that the perspectives of people who are relatively new to the organization may be having a disproportionate impact on the formation of ABC Energy’s strategy.
Strategy Formulation Network
| Tenure | ELT Conversations | Other Conversations | |
|---|---|---|---|
| 1 | 0-5 years | 59.1% | 30.4% |
| 2 | 5-10 years | 22.7% | 34.8% |
| 3 | 10-15 years | 4.5% | 17.4% |
Strategy Implementation Network
| Tenure | ELT Conversations | Other Conversations | |
|---|---|---|---|
| 1 | 0-5 years | 48% | 40% |
| 2 | 5-10 years | 28% | 30% |
| 3 | 10-15 years | 8% | 15% |
4. Intergroup Collaboration
Effective intergroup collaboration at the top of the organization is a critical driver of success.
Comparison of Required versus Actual Collaboration between Groups
This network below depicts groups that need to work very closely (e.g., to jointly diagnose and solve problems or complete tasks) if the organization is to achieve its strategy. This information is drawn from the interdependence mapping activity, and shows where the greatest level of interdependence is required between groups for the strategy to be a success.
This network depicts the intensity of strategic implementation conversations between groups. Lines represent communication channels in which more than 50% of the conversations that could occur between members of different groups are occurring. These very strong strategy implementation communication channels indicate a high level of collaboration.
We conducted a comparison of the degree to which the intensive strategic conversations occurring between groups are aligned with groups that need to work together intensively revealed that there are 11 instances where groups need to work with intensive interdependence but are not strongly connected. Working with the ELT and the leadership teams for these groups to improve strategic communication and collaboration will be vital to ABC Energy’s success.
| < 0.5 | Acct.-D&C | ELT-HSE | IR&GA-HR | ELT-IT | IR&GA-IT | ELT-P&FO | HR-Market. | IT-Market. | ELT-P&BD | Acct.-P&BD | IT-P&BD |
Priority Alignment throughout the Organization
The extent to which the priorities of different groups are in alignment can spur or derail collaboration between groups. Members of each group provided ratings for all other groups using the following scale: 1 = Not at all, 2 = To a small extent, 3 = To a large extent.
Colors represent the perceived goal alignment.
To read this priority alignment “heat map” read across the rows. For example, P&FO perceives low levels of alignment with IR&GA and P&BD.
The extent to which goal misalignment is critical to address depends on how intensively these groups must work together. We conducted a comparison of the extent to which there is perceived priority alignment between groups that need to work together intensively revealed that there are group pairings (listed below) in which at least one group sees their priorities to be misaligned.
| D&C-Acct. |
| D&C-IT |
| IT-IR&GA |
| IT-Market. |
| Market.-IT |
| P&BD-Acct. |
| P&BD-IT |
Intergroup Trust and Competence Assessments
The extent that people outside of a group’s boundaries percieve members of that group as trustworthy and competent will impact a group’s ability to collaborate effectively with other groups in the organization.
Trust
The chart below presents the percentage of each group’s incoming connections that perceive members of the group as having motives, honesty, and character that they strongly trust. 
Competence
The chart below presents the percentage of each group’s incoming connections that perceive members of the group as having the technical skills, experience, and dependability needed to fulfill their work obligations.
5. Functioning as a Team
The final section of this report provides a deeper look at the extent to which each team agrees that they need to and actually do work independently as as a team, are cohesive, collaborate and engage in joint decision-making, and produce three essential outcomes of leadership (direction, alignment, and commitment).
Gap Analysis of Needed and Actual Interdependence
A hallmark of a team is the interdependence of people who must work closely together to accomplish a goal or task.
Several groups in ABC Energy, including the ELT, are operating below needed levels of within team interdependence.
Within-Team Trust and Competence Assessments
Trust and competence is also critical to effective collaboration within teams.
Trust
The chart below presents the percentage of teammate’s who see each other as having motives, honesty, and character that they strongly trust.
Competence
The chart below presents the percentage of teammate’s who see each other as having the technical skills, experience, and dependability needed to fulfill their work obligations.
Levels of Cohesion, Collaboration, and Joint Decision Making
The more groups need to actually function as a team, the more important it is for the group to be cohesive, collaborate, and engage in joint decision making.
Cohesion
The members of cohesive groups get along well, enjoy working with each other, and have good relationships.
Collaboration
The members of collaborative groups volunteer to help manage the workload when teammates are busy, are flexible about switching responsibilities to make things easier for each other, are willing to help each other work and meet deadlines.
Joint Decision Making
Groups that engage in joint decision making are able to better execute actions in a coordinated way. They have a clear understanding of each other’s needs and expectations, let each other know when their actions will affect another member’s work, and have a shared understanding of joint problems.
The chart below provides a breakdown for each group of current levels of cohesion, collaboration, and joint decision making. As before, scores above 3 indicate that respondents generally agree that their group is cohesive, collaborates effectively, and engages in joint decision making. Scores below 3 indicate breakdowns in these critical aspects of teamwork. For example, several groups in ABC Energy, including the ELT are failing to engage in joint decision-making.
Leadership Outcomes
Leadership is a social process that enables individuals to work together to produce results they could not achieve alone. The organization’s success depends on each group’s ability to generate three crucial outcomes of leadership: Direction, Alignment, and Commitment (DAC).
Direction
Does the group agree on its overall goals?
Alignment
Does the group coordinate its efforts to achieve those goals?
Commitment
Do group members feel mutually responsible for the group’s success?
Scores below 3 indicate that a group is failing to produce a crucial outcome of leadership. For example, the ELT is struggling to produce a clear direction, which could ultimately undermine the strategic performance of the organization as a whole.
Groups who are not aligned may be dedicated and bought in but they are uncoordinated resulting in duplication of effort, people working at cross-purposes, and things falling through the cracks.
Groups who lack commitment may be coordinated and know what they want to achieve but lack the energy to deliver on things that require real effort.
Groups without direction are willing and ready to collaborate but lack purpose. As a result they spin their wheels, feel uncertain about what they are trying to achieve together, and are pulled in different directions.
Study Background
The development and delivery of this report was supported in part by the National Science Foundation (NSF SES #1853470) and a Behavioral Research Assistance Grant from the C. T. Bauer College of Business, University of Houston.
Principle Investigators (Research Leads)
Kristin Cullen-Lester, Ph.D.
Assistant Professor
C.T. Bauer College of Business
University of Houston
klcullen-lester@bauer.uh.edu
Dorothy Carter, Ph.D.
Assistant Professor
Department of Psychology
University of Georgia
dcarter3@uga.edu
Report Contributors
We would like to thank the following individuals (in alphabetical order) for their contributions to the development of this report.
Greg Bean
Director of the Gutierrez Energy Management Institute (GEMI)
C.T. Bauer College of Business
University of Houston
Kate Frear, Ph.D.
Research Scientist
Global Research and Evaluation
Center for Creative Leadership
Curtis Hampton
Data Scientist
Houston Lester, Ph.D.
Quantitative Psychologist
Justin Jones, M.S.
Ph.D. Student
Department of Psychology
University of Georgia
Chris Ross
Faculty Emeritus
C.T. Bauer College of Business
University of Houston
This study is conducted as part of an ongoing partnership between the University of Houston, the University of Georgia, and the Center for Creative Leadership. The aim of this study is to understand the complex web of relationships connecting managers at the top of organizations and how these relationships drive the top team’s performance and the organization’s success.
The design of the project is grounded in ours and others earlier research:
- Cullen-Lester, K. L., Maupin, C. K., & Carter, D. R. (2017). Incorporating social networks into leadership development: A conceptual model and evaluation of research and practice. The Leadership Quarterly, 28(1), 130-152.
- Carter, D. R., DeChurch, L. A., Braun, M. T., & Contractor, N. S. (2015). Social network approaches to leadership: An integrative conceptual review. Journal of Applied Psychology, 100(3), 597-622.
- Raes, A. M., Heijltjes, M. G., Glunk, U., & Roe, R. A. (2011). The interface of the top management team and middle managers: A process model. Academy of Management Review, 36(1), 102-126.
The data presented in this report were collected by using/adapting published scales from the following sources:
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- McCauley, C., Braddy, P., & Cullen-Lester, K. L. (2018). Measuring the outcomes of leadership: Direction, Alignment, and Commitment scale development. Working Paper
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